March 17, 2014

AT&T finalizes Leap Wireless acquisition

AT&T recently announced that it has completed its $1.3 billion acquisition of low-cost mobile phone carrier Leap Wireless and its Cricket brand. Although plans for the business merger were first revealed last July, both companies had to wait on approval from the Federal Communications Commission (FCC). 

When the deal was first proposed, the FCC expressed concerns that such a merger could decrease competition. In a press release that was published last summer, AT&T said that the business merger would be beneficial for most consumers. 

"The result will be increased competition, better device choices, improved customer care and a significantly enhanced mobile Internet experience for consumers seeking low-cost prepaid wireless plans," the telecom giant said. "The combined company will have the financial resources, scale and spectrum to better compete with other major national providers for customers interested in low-cost prepaid service."

As a stipulation of the approval, AT&T agreed to divest itself in certain markets and only use the infrastructure that was already put in place by Leap. In addition, AT&T said that it would begin to offer LTE service in South Texas within the next 18 months. The company will also provide a special rate for low-income individuals and people with health problems who depend on services like Lifeline. 

Now that the deal has been approved, AT&T will be able to expand its 4G LTE Network to a wider range of consumers. One of the main purposes of its acquisition strategy was to become more competitive in the growing low-cost prepaid market. 

Leap's low-cost brand, Cricket, currently covers approximately 97 million people in 35 states. Customer migrations to the new service are expected to be completed in 18 months.